Everything You Need to Know About the A&P Bankruptcy

Storied grocery chain A&P filed for bankruptcy protection this weekend under the crushing weight of its debt and serious structural problems including high costs for shuttered grocery stores and onerous supplier contracts.

Associated Press

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Associated Press

The company, formally known as Great Atlantic & Pacific Tea Company, owns supermarket chains under the names A&P, Pathmark, Super Fresh and Waldbaum’s. The company was founded in 1859 as a single shop in Manhattan.

In a bit of marketing bravado, cashiers in the original A&P store sat in gold pagodas, according to this Vanity Fair article. In the middle of the 20th century, A&P had risen to nearly the largest company in the country — behind only giant General Motors. (You’ll notice both of the American icons now have taken a turn in bankruptcy.)

(Read details from an A&P bankruptcy filing HERE. Also check out Citigroup’s “sell” call on A&P stock — after the company filed for bankruptcy.)

Here’s a look at A&P’s bankruptcy by the numbers.

-69%

The decline in A&P’s adjusted Ebitda from fiscal 2008 ($333 million) to $104 million for the 12 month period ended Sept. 11. A&P’s revenue over the period fell from $9.5 billion to $8.4 billion.

$3,210,965,000

Total debts listed in A&P’s bankruptcy petition.

$1.4 billion

The amount A&P paid to buy 141 Pathmark stores in late 2007. That deal, for which A&P took on $475 million in debt, proved to be the beginning of the end for a solvent company.

73

The number of “dark store” leases –- shuttered store locations that A&P hasn’t been able to sublease -– that the company is trying to dump as part of the bankruptcy filing. The net rental expense for the dark stores is slated to be $77 million for 2011.

16,000 vs. 395

The number of stores A&P operated nationwide at its height in the 1930s. Today, A&P operates 395 stores.

$800 million

18 months

The amount of time before the bankruptcy loan comes due once the deal closes. A&P noted the bankruptcy financing is “unique for a retailer in Chapter 11.” Indeed, most retailers on the brink have trouble securing such loans amid fears that vendors will flee and the company will enter freefall. See Circuit City, Linens N Things, etc. (Granted, credit conditions were far more constrained when those retailers sought bankruptcy protection).

2

The number of major Wall Street investment-bank restructuring shops A&P seriously engaged leading up to its bankruptcy filing. The company had been in advanced discussions with Moelis & Co. on restructuring steps. But according to a person familiar with the matter, A&P contacted bankers at Lazard Frères & Co. sometime in the past couple of weeks and hired them in recent days. Lazard advised A&P on obtaining bankruptcy financing, according to court papers.

70%

The share of A&P’s goods provided by C&S Wholesale Grocers Inc. A&P’s inability to negotiate pricing concessions from C&S played a role in its decision to file for Chapter 11 protection, according to a person familiar with the situation.

$13.4 million

Amount A&P owed to unsecured bondholders this Wednesday. Failing to make the payment would have adversely affected its senior credit facility. The person familiar with the situation said A&P was facing a likely bankruptcy filing and wanted to preserve that money rather than pay it to creditorswho would be low in the repayment pecking order during bankruptcy proceedings.

$10 million

The amount of a family loan to A&P in the form of an unsecured promissory note the company issued to Erivan Karl Haub, bearing an interest rate of 6% per year and maturing in 2011. Haub is the father of Christian Wilhelm Erich Haub, A&P’s chairman.

Comments (5 of 25)

A&P produce prices are obscene. To be specific, kirby cucumbers are priced at $2.49 per pound. Whereas today, the ShopRite price is $1.29 per pound. About two weeks ago they were $.99 cents per pound at Fairway. This was brought to the attention of corporate management and a response was never received. I could tell you horror stories about the local store and the indifference of corporate headquarters. However, it would probablt burn up this page.

10:14 pm December 5, 2011

Consumer sales wrote :

Called on grocery stores for almost 20 years and always considered A&P to be the doormat of the industry. It almost brought a tear to my eye the first time I saw a Pathmark billboard on the NJ turnpike with an A&P logo in the bottom corner. PM was once a proud and successful chain.....really sad what A&P has done.

7:22 pm September 17, 2011

Deli guy wrote :

Path mark acquisition was the final straw.....what a bad move. CFO Brenda galgano claimed that buy was highlight of her career. Where is she now? Hopefully out of Finance! What she and Haub did is criminal. Wonder if SEC is looking

10:10 am July 19, 2011

TD Dedicated employees wife of 31 years wrote :

To All who have the negative comments about the pay, medical, unions, immigrants,and so forth. Ignorance is the evil of all. If you don't no any truths why mouth off. I like to see your face if and when your job would be jeopardized after 31 years of service..It seems that more people on this website may have been educated from a book but don't have the common sense of a pea. Anyone who can gloat on someone (6000) people being without jobs. Well let me say It should happen to you...Furthermore A&P is A&P. Why are you the employees in the same category with the corporate office who runs them. They can only sell what the distributor sends them.. As far as quality its what comes is is what they can put on the stands. Da. Do you people forget what has gone on in the US as far as produce goes..If you shop at shoprite yes your paying less but your not getting any quality. . If you've gotten bad meat maybe you did not check the dates. This person who says about Pathmark and waiting time and service I guess your not from New York. You people are so ignorant. You are grouping a whole chain by isolated incidents. When you speak A&P Your grouping all there stores into one Cat. As far as Customer service Waldbaums is #1.As far as waiting if you go on a Friday after noon at 5pm and expect to be in and out at the Deli counter. You need to have your head examined... Its a joke when people come into a store and they believe everyone should drop everything even there previous customer to help that one.. As far as the messy, dirty,un organization Pathmark is #1 for that... A&P as a Corporation's downfall was buying out Pathmark and taking over it's debt.. That was the #1 Big Mistake...Addressing medical coverage and the Union and pension.. People pay into there pension it doesn.t come for nothing and if you so ignorant to except a job without paying coverage who's the fool.... I hope all the wishes for all the A&P employees some 6000 and all the people who are going to stop shopping there to make sure this happens for the bad, Well I just say this What goes around comes around. Watch out for your Jobs....!!!!I Wish you all the same wishes you wish us...and 10 fold.

9:01 am February 13, 2011

A&P #951 wrote :

The following is NOT a good sign. Investigate it...all of it. He's not here to re-build the A&P.
He's a salvage guy.

Most recently, Rayburn was CEO of the New York City Off Track Betting Corp., where, at the request of the Gov. David Paterson, he developed a reorganization plan and led negotiations with state racetracks and unions. He has also been CEO of Magna Entertainment Corp., Syntax-Brillian Corp., International Outsourcing Services, Muzak Holdings LLC and Sunterra Corp. Earlier in his career, Rayburn was chief restructuring officer of WorldCom, at that time the largest U.S. bankruptcy filing to date.

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